Fiserv CaseMarketing stretegy MBA2012-2013- Valentino De Girolamo- Eleonora Stentella- Matteo Turchetti- Vincenzo Di Lecce- Filippo Antonio Pisano
IntroductionGoals to reach• Make a good market segmentation to define how to invest and to which customers• Understand consumers perceptions and modify their approach to e-billing• Implement an effective communication strategy without increasing the budget and maximizing the results.Customers definition• Direct customers : billers and banks• Undirect customers: end users
Market potential and previsionWe estimate that the realistic market Growth scenario: comparison betweenavailable, in USA 2009, could be electronic payment systems and e-billing7.224.000.000 $ based on the fact that penetration. Trends assumptionsthere is a direct relatinship between according to first possible scenario afterelectronic payment systeme penetration the new customization strategy.and e-billing development.• the population is 86M (“onliners”)• € 60.200.000,00 (70% of “online consumers”) use electronic bill payment• less then 20% use e-billing to watch bills (€ 17.200.000,00)• frequency (recive bill): 10 times a monthMARKET POTENTIALè OUR FUTURE GOAL:10.320.000.000 $
Identification of clusters real customers needs and main informations
Targeting the clusters• E-Savvy • We identify 3 effective segments of market for ( 19,7% market share of bank transactions ) our business: E-Savvy Planners,- Identified as possibile early adopters and Maximizers, Self Improvers. pioneers- Already users of financial software Percentage of clusters over- Seek fast and efficient ways to manage bills total onliners population- Main Implication: less costs in switching from Paranoids Desperates paper billing to e-billing, high growth Convenience Seekers Self Improvers opportunities Maximisers ESavvy• Maximisers ( 27,1% market share of bank transactions )- Comfortable with new technology 8,90%- Highest percentage of Market Share 12,30%- Main implications: highest growth opportunities, 16,90% identified as possible market influencers. 13,70%• Self-Improvers ( 13,3% of bank transactions ) 27,10%- Do not believe they have a good system for bill 20,60% management
Communication problems to be solved according to focus group resultsQUESTIONS SOLUTIONS• “Who sends the e-bill? The bank • All the campaign will be driven by or the company I have to pay?” banks and billers using e-mail or outbound marketing trougth call• “Can I sign up for e-billing through centers. my bank or do I have to ask alla the individual companies?” • Customers could subscribe the service by just signing an e-mail contract with the bank. • Show the economic benefit of e-• “What exactly is the benefit of e- billing increasing also the price billing?” of paper bill in order to increase the spread between the two. • Create a specific price for mix end-users (change the markup) to reduce time of conversion.
COST ANALYSIS: all paper end users• Total onliner population: 89M• E-billing mix users (20% of tot. Onliners): 17,8M• Paper bill cost each bill 1,25 $Assumption:We consider just the variable cost according to the Case.We estimate the markup must be at least 15%, the minimum value at which we could cover the riskand parts of the adverstising cost (not yet defined in the case but important for future evaluation).• Bank/billers tot unit cost per end-users a month: 12,5 $• Minimum monthly price for end-users with markup 15%: 14,375 $• Annual end-users subscription: 172,5 $BANK/BILLERS CONVERTION COST• Average cost to convert all paper billing consumers in exclusive e-billing consumers 4,50$ per consumer• Average cost to convert all paper billing consumers in e-billing consumers $2,00/customer
COST ANALYSIS: e-billing mix end users• Tot. Onliner population: 89M• E-billing mix users (20% of tot. Onliners): 17,8M• Paper bill cost each bill 1,25 $Assumption:Mix end-users receive, on average, 10 bills/month: 5 electronic ( 1 electonic è 1 view ) and 5 paper*• E-billing service: monthly cost/customer: 0,125 $• Paper bill monthly cost/customer: 6,25 $• Bank/billers tot unit cost per end-users a month: 6,375 $• Minimum monthly price for end-users with markup 15%: 7,33125 $• Annual end-users subscription: 87,975 $BANK/BILLERS COST SAVINGGeneral saving for consumers who no longer recived the paper bill: 45% = 2,86875 $ eachconsumer + call center cost saving 2-4$ (median 3$) = 0,506225** $ cost/end-userAverage cost to convert both paper and e-billing consumers to turn off the paper $1,50/customer• For customers that recive both electronic and paper bill.• ** Compare to next slide
COST ANALYSIS: e-billing only end users• Tot. Onliner population: 89M• E-billing mix users (20% of tot. Onliners): 17,8M• E-billing cost for consumers which turn-off the paper: 0,40 $/monthAssumption:End-users receive, on average, 10 bills/month.• E-billing service: monthly cost/customer: 0,40 $• Bank/billers tot unit cost per end-users a month: 0,40 $• Minimum monthly price for end-users with markup 15%: 0,46 $• Annual end-users subscription: 5,52 $Conclusion:• The cost analysis show that turn-off the paper is convenient both for banks/billers (which can create different subscriptions according to different markup ) and end-users. The strategy should be creating according to the elasticity of the market to the prices as reported into the Case. “By 2009 electronic bill payment was gaining wider acceptations, with penetration given by convenience over traditional payment methods, saving on postage and improved perseptions of payment secutiry”
STRATEGY Meet an important “SET OF NEEDS FOR AN IMPORTANT SET OF CUSTOMER”.Short term Long term1. CUSTOMER VALUE MANAGEMENT 4. Operation : “REMIND ME”from customers satisfaction to It’s a long term phase; we think thecustomer loalty Direct targeting of customization of our clients is not onlycustomer which are already using regarding the short term.elettronics and paper bill service (mix). We suggest to invest in a new type ofThe conversion cost is estimated at 1,5$/ integrated service which could include:customer, less then other convertion. Payment transactions; e-billing and a2. ACQUISITION: finding new clients memorandum. The service could be builtSend e-mails to internet profiled users using a simple platform for modularpresenting the “Become e-billing end- innovation and promoting using e-mail andusers” campaign with specific benefits. outbound marketing (call center).3. Present OUR offer to OUR targetSpecific advertising campaign : links, website, brochure, social network, call center.
APPENDIX Answers to the professor questions QUESTION N.1• Positive and negative issue judgment about segmentationWe believe that the segmentation shown in the Case did not present some importantpoints related to the market. The first is the one directly connected to the price elasticityof the market. In the case is written that the positive result obtained by Fiserv’s onlinepayment system was due to the direct saving for customers. In this segmentation thereare no informations related to this point so that we cannot understand also which type ofeconomic risk customers will perceive when we will present the opportunity to shift fromthe bill paper to e-billing.We cannot understand also what is the final goal that people want to rich using internetdevices to make payments and do transactions (terminal value).
APPENDIX QUESTION N.2• What your choice of targeting?As already shown in the cost analysis slides we decide to consider not just one segmentbut 3 of them. The reason is very simple to understand. The new product (e-billing) isanswering to the real needs of just two simple of cluster (E-Savvy and Self improvers),which are looking for “better system” to cut time and better organize the bill, but justthe first cluster doesnt have a high risk perception due to the internet securityproblem. There is also another problem related to this case. The bad results shown in thepast make us thinking that is not correct to invest only in a specific target because westill dont know if the perceived benefits of the product are enough strong togenerate a profitable buzz (world of mouth). For the new strategy it will be better tohave one cluster of early adopter, one cluster as followers searching for bothconvenience and better bill management system and one cluster that, even if doesntneed the new system, could be involved to generate profit in the medium run.We will use the early adopter (E-Savvy) to cover the initial advertisting costs and we willuse the positioning to the Maximizers (III group) to increase the buzz when the productwill be ready to answer both explicit and implicit needs that are still on stage (in thetext it is clear that customers are looking for mainly a reminder system bill )
APPENDIX QUESTION N.3• How do you think is better to convert the target?According to the informations written to the Case, we already know that the targetmarket as high price elasticity. We decide to convert the target using different type ofapproaches. For customers that already use e-billing (mix customers) we will just presentour best price offer using the range of possibility shown by the markup valuation (e-billingwill be always more convenient even if we increase the markup). For mix users we willjust use the outbound marketing and e-mail marketing. Same marketing strategy,related to price, we will do to convince the 2 targets of E-Savvy and Self Improvers.For the Maximizers we will use another approach. People inside this cluster believe thatalready have a good bill management system so we will have less possibility to get theirattention using just the price formula. For them we will use another type of marketingstrategy. Because they are financial "influencers" into the market we will crate a specificcampaign to test the product and gain money to write technical and behavioralreview about the product itself. To introduce the campain we will use link-buildingstrategy and social media marketing; banners and specific landing page connected to thebanks or billers website
APPENDIX QUESTION N.4• Which is the role and involvement of the merchant in a BtC through B approach?It is a strategic rule because it base to create a sort of bridge between to differenceneeds. In this case Fiserv is playing the master rule because through the final customers(end-users) it could increase the banks/billers benefits and also its own revenues. Webelieve that in this specific Case the most important issue to take into account is theprice setting. Making the right price for the service to the bank will help to find the betterstrategy for the end-users. If the banks or the billers could have more flexibility inchanging from one markup to another (bacause they still have margin due to acompetitive service price setting by Fiserv) they could create more subscriptions’promotion strategy according to the demand elasticity.